The average business owner who wants to start a new business is faced with the challenge of raising capital. Beyond personal savings, this search for money to invest in a business idea leads to friends, family, angel investors and venture capitalists.

When these sources are not forthcoming or do not amount to much, the search extends to business loans, possibly from banks. However, it is near impossible for a bank to fund a start-up. The start-up does not have a credit standing. It will be asked to provide collateral to secure the credit. It will be requested to present business projections showing how it will make money and how the bank will be re-paid. Its chance of securing bank finance is severely limited if it cannot meet these requirements in support its loan application. Because the bank, which is not a risk-taker, expects to recover its money, principal plus interest.

The frenzy surrounding start-ups looking for money makes it seem like that is the only way to finance a new business. Certainly not.

Instead of spending your time trying to raise money from friends, family, angel investors, venture capitalists, banks, etc., bootstrapping may be your best solution. Bootstrapping is when the entrepreneur or business owner starts a business with little capital, and tries to found and build a company from personal finances or operating revenues of the new business.

Should you decide to consider the bootstrap route, here are some tips to guide your journey in bootstrapping.

Do Low-Budget Market Research: If you need to research your market to further validate your product or service, don’t spend an arm and a leg. Go low-budget. Ask friends and family. Do random surveys. Talk to specialty groups likely to use your product or service. Touch base with potential channel partners about what they are looking for.

At the end of your research, ensure that you have a product or service that is ready for the market, before you continue spending money on many other things. You can then proceed to test, refine and deliver your product or service at a cost and price that will turn a profit for the business.

Your Goal and Your Plan: You should think about your goal and your plan. What type of business do you want to build and how do you create a plan for building it? What is your capital requirement and what will you use it for? Are you in a position to pour your savings into the venture? How much personal time, resources and money can you allocate to it?

Form Your Core Team: You need a small team of people with complementary skills and knowledge. Your core team should have members with diverse expertise to help you keep costs low by completing most tasks in-house.

Consider external partnering to increase the success percentage of your business. If your team lacks a certain skill, collaborate with a partner organisation.

Budgets And Milestones: Your budget will tell you where your resources (read: time and money) are coming from and where they are being spent. Prepare your budget upfront and watch it with an eagle eye. Always remember that cash flow is king. The business dies when it runs out of cash.

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